Following the abysmal decision by the Obama administration, presented in IEA letterhead, to release crude stockpiles, the resulting lower prices lasted less than one week, and in the case of gasoline, the price has actually surged way above the decision day fixing. So what is an administration with no credibility to do? Why double down of course, and sell even more crude at firesale prices to the Chinese. Per Reuters: "The International Energy Agency could decide by mid-July whether the release of strategic oil reserves needs to be extended for a month or two, an official said." And there is that transitory word again: "Richard Jones, deputy executive director of the
IEA, said he believed the release would be temporary since demand would
likely drop in the fourth quarter." Well demand may drop, but the last time demand was actually relevant in price discovery was sometime in the 20th century. Welcome to the era of oil prices defined by monetary policy.

"We do believe it could be temporary but we have to see how the market evolves. There could be other disruptions, for example, we are compensating for the losses in Libya," Jones said at an event in Mexico City.

A decision on whether to extend the release could be made around the third week of July, he said.

"It will be up to our member countries, they could decide to continue it for a month or two. I don't see that we'll need to continue it for very long because we see demand declining in the fourth quarter, so we think it's a temporary measure."

Sure, blame Libya. And if possible please keep antagonizing an already irrational OPEC sans Saudi, which can't wait to receive even loss for the oil it exports, and may take a few weeks to realize that a several day export embargo will generate a far greater return in the long run that continuing to kowtow and retreat, for the time being, in the latest war of attrition with the IEA.

I thought about this too, but I'm ambivalent as to whether it was an odd choice of words or an intentional choice of words.

My best guess is that they are contemplating a Release II, but they don't want to call it that, and so they came up with "extension," to make it seem like less of a second dumping so shortly after the first dumping, which might suggest that the first dumping was a failure, and even more pulling on the knot in a misguided attempt to loosen it. Or an outright move to kick the can down the road, as they must know that oil supply constraints are the root of the problem.

It makes me insane that the answer is not to blame monetary policy for the price spike, and to release oil from reserves to counter the monetary policy. It seems th elite will take any tactic to make sure they avoid actually having to deal with the cause of something and instead try to deal with the effects. this of course makes the situation worse in the long run

Crude oil futures extended gains on Wednesday, climbing to a one-week high after a government report showed that U.S. crude oil inventories fell significantly more-than-expected last week, easing concerns over a slowdown in demand from the world’s largest consumer.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD94.53 a barrel during U.S. morning trade, jumping 1.85%.

It earlier rose as much as 2% to USD94.72 a barrel, the highest price since June 22.

The contract traded at USD93.85 prior to the release of the EIA data.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell more-than-expected in the week ended June 24, declining by 4.4 million barrels, nearly tripling expectations for a 1.5 million barrel decline.

Crude supplies fell by 1.7 million barrels in the preceding week.

Total U.S. crude oil inventories stood at 359.5 million barrels as of last week, remaining above the upper limit of the average range for this time of year.

Total motor gasoline inventories unexpectedly declined by 1.4 million barrels, confounding expectations for a 0.8 million barrel increase.

U.S. crude oil imports averaged just under 8.9 million barrels per day last week, down by 271,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.8 million barrels per day, 891,000 barrels per day below the same four-week period last year.

U.S. crude oil refinery inputs averaged about 15.2 million barrels per day, 31,000 barrels per day below the previous week’s average. Refineries operated at 88.1% of their operable capacity last week.

Gasoline production decreased last week, averaging nearly 9.1 million barrels per day. Distillate fuel production increased last week, averaging about 4.4 million barrels per day.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery surged 2.2% to trade at USD110.89 a barrel, up USD16.36 on its U.S. counterpart.

dcb wrote: "It makes me insane that the answer is not to blame monetary policy for the price spike, and to release oil from reserves to counter the monetary policy."

Challenge your assumption. It is not monetary policy driving the oil markets. Sure, there is some impact on oil price from money pumping and fiat chasing non-paper investment.

But don't discount that oil supplies are tight and getting tighter.

If they know that oil supplies are going to be sharply lower over the next 12 months, then this move becomes obvious - they are preemptively attempting to prevent a rapid spike in price and gross civil discontent in the U.S.. Maybe they believe they can buy time to get through driving season - but the piper will be paid.

FrankIvy I think you are spot on, spare capacity is now zero. Production decline rates are far higher than we are being told. This smacks of desperation and then some. If it were merely a matter of price then why not wait till oil tested the old highs around $140 a barrel? You can massage statistics and outright lie all you want, but you can’t print oil. I don’t think we’ll have to wait till 2012 before things get ....interesting.

You don't fight controllers of massive proven reserves that supply to the world with arguably 40 days worth of supply.... Who the hell is running this show? Is this amateur hour? Can't wait for the return of the gas lines from the 70's. Hopefully, these idiots won't piss Canada off too.

Pissing off Saudi Arabia is irrelevant. If the US finds a huge reserve should we not tap it because we'd lower the price of oil and piss off the Saudi's? They'll sell all their oil either way, whether to us or China.

The real issue is the corruption and incompetence of the IEA and the Obama Administration. There is nothing "strategic" about the summer driving season. It's a patheitic political ploy by an incompetent leader who is seeing his chances for reelection go down the drain as the economy falls flat on it's face.

I'm not just talking about Saudi Arabia... I mean OPEC. And while, yes, they will sell their oil anyway, they don't need a whole lot of inspiration to put some pressure on their biggest customer and thus jack up profits.

In regards to the reserve tap, while I agree, it still takes a lot of time. Even the most incompetent political advisors should have been able to point this out as a mistake. As much as they are trying to not repeat the Carter years, their efforts are failing.

E.g. - if they know a supply constraint is coming, they may be trying to get the price down in front of that constraint, because a move like this might be thought to have less impact in an obvious bull run than at this moment.

I laughed when I saw the neo con DrudgeReport title yesterday of "Iran tests nuclear missile." LOL The drum beat for war is loud. Nuclear missile? Give me an effing break. The title is a complete lie, but the sheeple sucked it right up I'm sure...

Maybe. But who knows. The whole ME thing has been set up as a perpetual war. Very Orwellian. I think it is a distraction. It is about oil (of course). And I think it is the ultimately "Plan B" - the panic button that can be pushed if other plans do not succeed.

Thats right, we're now fire-selling the last of our assets, China doesnt want any more funny money.

We've already sold off all our jobs and manufacturing, our once huge grain reserves are now nothing, now all our oil is sold off. If people cant see whats really going on, that will be their own very uncomfortable problem real soon.

Like the Fed they are only left with rhetoric to engage reality. This is a trial balloon meant to get price lower before 4th of July but it won't work. What scares them the most is that they are one ME event, uprising or Iran lowering production from having 125 oil.
People need to be addressing the real issues which is the money printing and these guys are talking about Ringling Brothers solutions.